February 13: The royal treatment: With Prince Andrew and Judith Nathan, Giuliani shows off his honarary knighthood in London.

The dark-oak-paneled offices of Giuliani
Partners are on the twenty-fourth floor of a new skyscraper at the corner of
42nd Street and Seventh Avenue, built by Mort Zuckerman as part of the Times
Square redevelopment that Giuliani ushered along as mayor. Giuliani has the
largest space, with a picture window with a spectacular view north. Directly
across the street is the zipper building, One Times Square. Sometimes
Giuliani looks out and remembers the day three years ago when he watched an
emergency scene here: A giant mylar sign was flapping loose from One Times
Square, and 20 floors off the ground a firefighter dangled to tie it safely
back down. The firefighter was Terry Hatton, the husband of Giuliani's
assistant then and now, Beth Petrone. Three weeks ago, Giuliani attended the
christening of Petrone's 3-month-old baby daughter. Hatton died at the World
Trade Center, never knowing his wife was pregnant.

When Giuliani walks the thick gray carpet leading from his suite, he sees
many of the same faces who've orbited outside his office for twenty years.
The other partners at what employees call G.P. are Denny Young, who goes
back to Giuliani's eighties days in the U.S. Attorney's office; Michael
Hess, most recently the city's corporation counsel; Tony Carbonetti, chief
of staff in Giuliani's City Hall; and Teitelbaum. Tom Von Essen, the former
fire commissioner; Richie Scheirer, former head of the city's Office of
Emergency Management; and Kerik are senior vice-presidents. Sunny Mindel,
communications director, is as potent a force at G.P. as she was as
Giuliani's mayoral press secretary. The one prominent newcomer is Roy
Bailey, a Texas financier, who came aboard to handle the firm's investments.

Giuliani Partners admits to only four clients; its other deals are either
said to be "in formation" or confidential. The first, Merrill Lynch, came
aboard in April. Giuliani has been friends with senior Merrill executives
for decades. But his loyalty, and his eagerness to sign up a big-name
client, led Giuliani into a mistake. When New York attorney general Eliot
Spitzer went after Merrill for publicly hyping what its analysts believed to
be overvalued stocks, Merrill asked Giuliani for help heading off both a
possible fraud prosecution and a certain public-relations debacle. Giuliani
called Spitzer -- and was promptly, embarrassingly snubbed. Giuliani was too
late; Merrill caved, paying a $100 million settlement. Spitzer made his
decision on the merits of the case, but Giuliani's call also triggered a
sour memory: When Spitzer was elected attorney general in 1999, he placed a
courtesy call to Giuliani. The mayor never called back.

In the next few months, when the reeling Arthur Andersen, Enron, and Tyco
came calling, seeking a public-relations white knight and waving millions of
dollars at Giuliani, the former mayor politely declined. Much of the
consulting work done so far by Giuliani Partners sounds more like good
old-fashioned lobbying. "Nextel is trying to broaden its use throughout
police departments and public-service emergency departments throughout the
nation -- sheriffs, police departments, fire departments," Von Essen says.
"So we've been trying to talk to them on how we think they could do a better
job of marketing their product."

That Giuliani Partners is selling itself as an expert in emergency
communications is especially ironic given what New Yorkers have learned
about the failure of the NYPD and FDNY to talk to each other before and
during September 11. The recent McKinsey report on the flawed World Trade
Center response angered Giuliani and company. "We talk about that a lot,
about how people look back a year later and say, 'They should have, they
would have, they could have,' " Kerik seethes. "Fuck that. Nobody can tell
me what was right or what was wrong, unless you were standing next to me.
There was only a couple guys standing next to me. And Rudy was one of 'em."

Giuliani's third police commissioner has been working with Purdue Pharma,
the drug manufacturer plagued by the theft and abuse of its OxyContin
painkiller. "The mayor and I just met with Asa Hutchinson, the director of
the DEA; his staff; and people from Purdue," Kerik says. "We don't want
Purdue put in a position where it winds up being taken over by the courts.
Or they get put out of business. What I'd like to see come out of this is we
set model security standards for the industry." Coincidentally, last week
Giuliani raised $15,000 for the DEA's traveling museum.

"Is Rudy more relaxed?" Kerik says with a laugh. "No. At ease? No. Nothing's
changed. Personally, I love the guy. He's the godfather of my daughter.
We're very, very close. But there's never a time that you forget he's the
boss." Lately, though, that power relationship seems to have grated on
Kerik. He's pushed for the spinoff of a company called Giuliani-Kerik.
"How'd you get that?" Kerik splutters. "The corporate papers aren't done
yet!" He regroups to say the new venture isn't a sign of any itchiness. "We
decided to create the firm as a competitor to the Krolls and Decision
Strategies and other companies like that. It could be litigation support,
dignitary protection, other security-consulting issues. Giuliani Partners is
sort of a much-higher-level global consulting."